USPS financial status in 2021

In 2020, most U.S. postal service operations were disrupted by the Coronavirus pandemic. The service saw a 9 percent drop in the entire mail volumes compared to the previous year of 2019.

The overall reduction was primarily attributed to a 4 percent drop in first-class mail deliveries and a 14 percent dip in marketing emails, like advertisements. However, despite the overall decline in volume, package volume in 2020 increased up to 32 percent.

The increase in election-related mails led to the temporary spike in the mail volumes in September and October before falling by the end of the year. While this rise might have led to an increase in financial strength, less was recorded in the following year of 2021.

Find out what are the statistics of the USPS financial reports, 2021 are and what are the expected moving forward.

USPS financial reports for the second quarter financial year 2021

The United States postal service recently announces its financial report for 2021, second ended March 31, indicating a net loss of $82 million compared to a net loss of $4.5 billion the same quarter last year.

As the pandemic increased, in demand for package deliveries was not adequate to clear increased operating costs and a drop in mail services revenue.

If permanent workers' compensation adjustments for every period are excluded, the loss would have reached $1.7billion, compared to 1.9billion for the same quarter last year, according to the USPS financial report of the second quarter of the fiscal year 2021.

The second-quarter reports included the postal service's ten-year strategic plan, also known as Delivering for America. This plan aims at delivering excellent service and revamp financial stability while still maintaining the six-day mail delivery and extending the seven-day package delivery.

The plan also targets investing in technology, post offices, training, and a new fleet of vehicles. These are targeted towards modernizing delivery networks, setting the best logistic systems in transport and delivery operations, and creating new revenue-generating avenues in a fast expanding e-commerce marketplace.

According to Postmaster General and CEO Luis Dejoy, the Delivering America Plan will make the postal service a high-performing, growth-oriented entity operating with high precision, get above 90 percent timely deliveries, and does so at a much lower cost.

The postal service recorded total revenue of around $18.9 billion in the second quarter USPS financial reports, an increase of approximately $1.1billion, or 6.0 percent up from the same quarter in the previous year.

Due to the emergence of the pandemic and a decline in secular mails, the sales from postal mail service, the largest sales category, continued to reduce during the second quarter compared to the statements from the previous year of the same quarter.

Marketing mail revenue reduced by $511 million, translating to 13.7 percent, on a total volume decline of 2.3 billion pieces. The first-class mail revenue also dropped by $390 million, or 6.1 percent, on a total decline of mail pieces.

USPS Financial statements on sales from packages and shipping.

Contrary to other categories, the postal services sales from packages and shipping increased by around $2.0billion, translating to 33.6 percent, a total increased volume of 376million pieces, equating to 25.3 percent against the same quarter last year due to the surge in e-commerce linked to the pandemic.

Despite this increase, shipping and packages contribute a lower margin per revenue dollar owing to high transportation and labor expenses.

While the postal organization believed that consumers' behaviors evolved during the Covid-19 crisis, they still expect the surge to reduce as the countries continue to open their economies partially.

Additionally, service performance improved in the second quarter of USPS financial reports, and it is anticipated to continue increasing. Also, the service expects that the network infrastructural investments like the installation of new package processors will meet the constantly changing customer's needs before the 2021 holiday season.

According to the chief financial officer, Joseph Corbett, the financial statement for the quarter and the trend of reducing mail volume and rising package volumes shows why the ten-year Delivering America strategic plan should be implemented.

He further noted that the plan provides a better framework for innovative ways to grow revenues, deliver more efficient work, and attain financial sustainability towards fulfilling the global service mission.

In addition to all these statistics on labor charges to support the increasing volumes, transportation costs increased to $336million, an equivalent of 16.7% compared to the last year’s same quarter USPS financial statements.

This was primarily because of the effect of higher package volumes on highway transportation and air and changes in average package sizes as customer behaviors continue to change during the pandemic.

Selected second quarter USPS financial report on results of controllable and operations loss

This new USPS financial statement refers to loss excluding workers compensation adjustments not calculated and provided according to the generally accepted principles in the U.S... Loss excluding workers' compensation allowances can be defined as net loss, changed for workers compensation expenses due to actuarial revaluation and discount rate adjustments, which are out of management's control.

Additionally, this new release references controllable loss, which is not calculated and presented according to GAAP.

Controllable loss is defined as a net loss modified for non-recurring items and items that are not within management’s control.

The changes include employee's compensation charges that are influenced by actuarial revaluations and discount rate changes, civil service retirement system, amortization of Postal Service Retiree Health Benefits Fund, and Federal Employee Retirement Systems, all of which are unfunded liabilities which are bound to fluctuate because of the foreseen inflation and interest rates.

Attempts to restore the financial muscles of the U.S. postal services.

The following are some of the proposed attempts to bring back the service to its financial feet by different stakeholders within the government and the organization itself.

1. Senate proposal for the bipartisan postal reform bill.

In the recent efforts to restore the service’s financial sustainability, a section of bipartisan senators recently introduced a bill that will see the struggling get back to its feet after several calls for help from the service fell on deaf ears.

Senate homeland security and government affairs committee chair Gary Peters and top republican committee member Rob Portman initiated measures to replace the upfront funding requirement for postal service retirees. This, they claimed, has crippled the ailing agency and include retirees' healthcare using Medicare.

The lawmakers argue that the legislation aims at saving the postal services a total of $46billion over the next decade. The bill will also require the service to continue at least six days a week delivery, request data from the postal service's website, and report information on finances and operations to congress every six months.

With every reason of the bill pointing towards revamping the financial strength of the postal service, the House Oversight and Reform Committee unanimously voted to pass the companion bill last few weeks.

As reported by the New York Times, "legislation to address has languished in Congress for years, but with enough Republican support to pass the senate, the announcement of the bill is an unexpected indication of a bipartisan compromise in a divided Congress."

The Postal Reform Bill is a twisted version of the USPS Fairness Act, introduced by Democrats in February. It also seeks to move most postal retirees to Medicare plans for their healthcare.

Also, Postmaster General Louis Dejoy recommended the previous bill, noting that its primary objectives were essential in removing projected losses in the next decade according to their 10-year strategic plan.

USPS, which should be self-sustainable, has lost over $87billion over the past fourteen financial years and still is projected to lose another $9.7billion in the financial year 2021. These losses are due to strict mandates like the pre-funding that need to be stopped.

"For decades, the postal service has struggled to overcome the unfair and burdening financial requirement that puts its ability to provide reliable service at risk," said Senator Gary Peters of Michigan.

He further referred to the bill as a "common-sense legislation that would help return the postal service on a sustainable financial footing, ensure the service is more transparent and accountable to America citizens, and support the hardworking postal workers who deliver rain or shine to communities across the country."

Conclusion

The United States Postal Services recently released their financial statement of the fiscal year second quarter, indicating a loss of $82billion compared to $4.5 billion in the same quarter last year.

Several factors can be said to have led to this loss, starting from the coming of the Coronavirus pandemic, pre-funding mandate, and postal retirees' health care compensations.

While these losses are expected to go past 2021, several efforts have been made in a bid to salvage the service financially. These include passing the Postal Reform Bill by the bipartisan senators and implementing Delivering America Plan-a a 10-year strategic plan aiming to bring back the service to its financial footing.